Blockchain is one of the buzziest words in business today with seemingly daily headlines announcing a new cryptocurrency or other blockchain-based enterprise. With all the ink being spilled over this new technology concept, some may be tempted to dismiss blockchain and its various uses as an overblown fad, perhaps calling to mind the dot-com bubble of the early 2000s. That comparison may, in fact, be apt. Though the internet boom produced its fair share of duds and financial calamities, it was also revolutionary, creating businesses and services that dominate every corner of society today. So too is the far reaching potential of blockchain.
Stated most simply, blockchain is a digital, distributed ledger of transactions that occur across a network. What makes the concept so unique and disruptive is that it eliminates the need for a centralized third party (a bank, for example) to validate a transaction. The technology most notably underpins cryptocurrencies such as Bitcoin, but the applications are varied (i.e. self-executing contracts and identity verification) and sometimes surprising (facilitating distributed energy grids).
Building on its flourishing tech and startup ecosystem, Colorado has emerged as a hub for blockchain entrepreneurship. In a recent report from Crypto Fund Research that examined 300 cities across the country, Denver ranked 6th for blockchain startups and 10th for blockchain and cryptocurrency jobs. Seeking to further establish Colorado’s role as a leader in the field, Governor Hickenlooper established the Council for the Advancement of Blockchain Technology. The Council’s 12 appointees include investors, attorneys, members of the state General Assembly, and blockchain entrepreneurs. The goal of the Council is to develop recommendations for a “comprehensive legal framework to support blockchain technology that considers potential applications and boundaries of the technology and protection for consumers.”
After its initial meeting, the council intends to focus on the following areas:
- Definition of “tokens”
- Banking/money transmitting
- Smart contracts
- Digital identity
- Government use of blockchain
- General regulatory environment
- Debt payments
Blockchain has thus far operated in the regulatory Wild West, largely unaddressed by state or federal regulation. As a result, the Council will address many of these issues, and all their attendant implications, as matters of first impression. The recommendations that emerge from the Council are likely to have the attention of public and private stakeholders from around the country. It’s a familiar position for Colorado. Just as with marijuana, Colorado has the opportunity to set the pace for the nation on another multi-billion dollar industry.